In an otherwise seemingly successful insurance coverage action, UnitedHealth Group was denied liability coverage under one excess insurance policy based on the failure to deliver a notice of claim to the precise address specified in the insurance policy.

UnitedHealth faced substantial claims concerning, among other things, allegedly inadequate health insurance reimbursements, which it settled for $350 million. UnitedHealth sought coverage from ten primary and excess insurers. The coverage case has been litigated for years and involves many issues, but one aspect of this most recent decision carries a cautionary tale for policyholders. One of UnitedHealth’s excess insurers, National Union Fire Insurance Co., successfully moved for summary judgment based on the fact that UnitedHealth did not provide notice of its claim to the correct address within National Union.

Adequacy of notice is a frequent issue in insurance coverage litigation. The vast majority of such cases involve the timeliness of notice. Some involve the adequacy of the notice’s content. This case, however, involved UnitedHealth’s failure to give notice to National Union at an address specified in the insurance policy.

The U.S. District Court for the District of Minnesota held that literal compliance was not required, only substantial compliance, but that UnitedHealth failed to meet that standard: “substantial compliance requires compliance that is substantial,” and providing notice to a National Union representative does not constitute substantial compliance with the policy’s requirement that notice be provided to the Claims Department at a specific address.

To read the order in UnitedHealth Group Inc. v. Columbia Casualty Co., click here.

Why it matters: UnitedHealth learned a hard lesson: insureds should make every effort to comply with an insurance policy’s notice provisions. The failure to do so may be defensible in a given circumstance, but as UnitedHealth learned, it may not. And, as always, read the entire policy; a notice (or other) provision in the main portion of the policy may be modified by endorsement.